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THE STATE SECURITIES COMMISSION

THE STATE SECURITIES COMMISSION

DECISION No. 59/2000/QD-UBCK OF JULY 12, 2000 PROMULGATING THE REGULATION ON BIDDING FOR GOVERNMENT BONDS THROUGH THE CENTRAL SECURITIES TRADING MARKET

THE CHAIRMAN OF THE STATE SECURITIES COMMISSION

Pursuant to the Government�s Decree No.15/CP of March 2, 1993 on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;

Pursuant to the Government�s Decree No.48/1998/ND-CP of July 11, 1998 on securities and securities market;

Pursuant to the Government�s Decree No.01/2000/ND-CP of January 13, 2000 on the issuance of Government bonds;

Pursuant to the Finance Ministry�s Circular No.55/2000/TT-BTC of June 9, 2000 guiding the bidding for Government bonds through the central securities trading market;

At the proposal of the director of the Department for Securities Issuance Management,

DECIDES:

Article 1.- To promulgate together with this Decision the Regulation on bidding for Government bonds through the central securities trading market.

Article 2.- This Decision takes effect after its signing.

Article 3.- The director of the Office, the director of the Department for Securities Issuance Management, the director of the Securities Trading Center and the heads of the units, of the State Securities Commission and the concerned parties shall have to implement this Decision.

Chairman of the State Securities Commission
NGUYEN DUC QUANG

REGULATION ON BIDDING FOR GOVERNMENT BONDS THROUGH THE CENTRAL SECURITIES TRADING MARKET

(Promulgated together with Decision No.59/2000/QD-UBCK of July 12, 2000 of the Chairman of the State Securities Commission)

Chapter I

GENERAL PROVISIONS

Article 1.- Regulation scope

This Regulation provides for the bidding for Government bonds (GBs in abbreviations) through the central securities trading market understood as the Securities Trading Center (the STC in abbreviations). The issuing agency shall be the Finance Ministry. The bidding organizer shall be the STC under the Finance Ministry�s authorization.

Article 2.- Interpretation of terms

In this Regulation, the following terms shall be construed as follows:

2.1. Government bond bidding is the sale of bonds to bidding participating organizations that satisfy all requirements set by the Finance Ministry and have low tendering interest rates.

Interest rate competitive bidding is a process whereby the bidding participating organizations offer their tendering interest rates, so that the bid-evaluating organizations can select the bid-winning interest rate.

Non-competitive bidding is a process whereby the bidding participating organizations do not offer their tendering interest rates; but subscribe to GBs at the bid-winning interest rate determined according to the competitive bidding�s result.

2.2. Directed interest rate is the maximum tendering interest rate prescribed by the Finance Ministry, at which a bidding participating organization may win the bid.

2.3. Tendering interest rates are the GB interest rates offered by bidding participating organizations and calculated in percentage (%) per year, which contain no more than two numerals to the right of the decimal point. Those interest rates offered with more than two numerals to the right of the decimal point or in excess of the directed interest rate (if any) shall not be accepted.

2.4. Tendering volume is the total par value of GBs that a tendering unit undertakes to buy at its tendering interest rate.

2.5. Bid-winning volume is the total par value of GBs that a tendering unit is entitled to buy according to the bidding result.

2.6. GB issuing interest rate is the bond interest rate determined through the bidding result.

2.7. Counterfoil interest rate is the interest rate used as basis for determining the interest amount to be periodically paid to owners of GBs with periodically paid interest.

2.8 Collateral security is the money amount each tendering unit has to deposit at the STC for being permitted to participate in the bidding.

2.9. Designated bank is the Bank for Investment and Development of Vietnam selected by the State Securities Commission to serve collateral and payment transactions.

Article 3.- GBs to be bid through the STC shall bear the following forms and characteristics:

3.1. Having a term of one year or more. Having the minimum par value of VND 100,000, while higher par values shall be prescribed in specific multiples of 100,000 by the Finance Ministry for each issuance batch and announced by the STC in the issuance notices;

3.2. GBs shall be issued in form of certificates or book-entries.

Form of bond certificates shall be set by the Finance Ministry. The State Treasury shall organize the printing and uniform management thereof throughout the country.

All kinds of bid-winning bonds shall, upon being issued, be booked into the securities custody accounts according to provisions of Article 17 of this Regulation and their owners shall be granted bond ownership certificates. In cases where the bid-wining subjects wish to withdraw GB certificates, the withdrawal shall be effected according to the procedures and regulations of the STC.

Chapter II

SPECIFIC PROVISIONS

Article 4.- Bidding forms

The bidding for GBs through the STC shall be conducted in forms of interest rate competitive bidding and non-competitive bidding. Each bidding member may simultaneously participate in both competitive bidding and non-competitive bidding.

Article 5.- Subjects eligible to participate in GB bidding are those defined at Point 3, Section II of the Finance Ministry�s Circular No.55/2000/TT-BTC of June 9, 2000 guiding the bidding for Government bonds through the central securities trading market. Only units recognized as bidding members may participate in the bidding.

Article 6.- Granting of bidding member certificate

6.1. The STC shall base itself on the conditions prescribed by the Finance Ministry to consider the granting of bidding member certificates to the qualified subjects or to withdraw bidding member certificates from those unqualified for bidding for GBs through the STC.

6.2. By November 15 each year at the latest, organizations wishing to act as bidding members shall have to submit to the STC the following documents:

- A bidding membership application;

- Copies of the establishment permit (or the establishment decision issued by the competent body) and the business registration paper (for case of the first application filing or where there is a change in the charter capital);

- The financial statement of the latest year (comprising accounting balance sheet and business result report).

By December 15 at the latest, the STC shall have to publicize the list of units recognized as bidding members for the next year together with their code numbers.

6.3. After being granted GB bidding member certificates, the members shall have to comply with the conditions prescribed in this Regulation. In case where a member that has committed act of violation and been warned by the STC, but failed to remedy or repeatedly relapse into such violation, the STC shall withdraw its member certificate.

6.4. Each member shall be entitled to nominate only one representative to participate in the bidding. In case of necessity, the head office may authorize a branch to act as its representative.

Article 7.- Conditions for participating in the bidding

7.1. Being a member for bidding through the STC;

7.2. Having a collateral account at the designated bank and deposited the collateral money strictly according to the provisions in Article 9 of this Regulation;

7.3. Complying with all the procedures and regulations on GB bidding prescribed in this Regulation;

7.4. Having filed a bidding registration application at the STC;

7.5. Having a securities custody account opened at the STC or a custody member.

Article 8.- Bidding notification

Two working days before the bidding is organized, the STC shall send GB issuance notices to the bidding participating members by the following modes:

8.1. Sending the notices by fax to the bidding members;

8.2. Sending the notices via the computer networks to the members that have connected to the STC�s computer network;

8.3. Posting up the notice at the STC�s head office;

8.4. At the same time, the above-said GB issuance notice shall be publicized on the mass media, including Nhan Dan (People) and Sai Gon Giai Phong (Liberated Sai Gon) dailies and the Central Television Station.

Article 9.- Collateral

9.1. Before the bidding registration deadlines, the bidding participating organizations shall have to ensure the minimum collateral level of 5% of the total volume registered for bidding.

9.2. The collateral amount specified at Point 9.1 above must be put into the collateral account opened at the designated bank. For the collateral period (from the time when the deposit is made till its release), such collateral amount shall not enjoy interest.

9.3. Before the bid-opening time, the designated bank shall send to the STC the written certification of the list of collateral members and their collateral amounts.

9.4. Right after the bidding result is obtained, the STC shall request the designated bank to refund the collateral money to the bid-failing subjects and channel the whole collateral amount of the bid-winning subjects to the State Treasury�s account opened at the State Bank�s Transaction Bureau. The collateral amounts shall be cleared against the bond settling amounts of the bid-winning units.

Article 10.- Bidding registration

10.1. All bidding registration application forms shall be sent to the STC before 13:00 hours on the bid-opening date. Each member shall be entitled to fill only one registration ticket for one kind of GBs. In cases where various kinds of GBs are opened to bidding, each kind must be registered on a separate ticket. After registration tickets are sent in, the registering unit shall not be allowed to make any additional amendments.

Registered volumes shall be calculated according to the GB par value. The registering unit corresponding to each interest rate must be VND 100 million.

10.2. For non-competitive bidding, the participating subjects shall fill only volume of GBs they subscribe to.

For competitive bidding, the interest rates registered for bidding shall be inscribed in percentage (%) per year with no more than 2 numerals to the right of the decimal point. Each bidding registration ticket shall be used for registering no more than 5 different interest rates. At each interest rate, the registered volume must be inscribed in letters and numerals. In case of a disparity between the inscription in letters and in numerals in a registration ticket, such registration ticket shall be considered invalid and eliminated.

10.3. In case of direct bidding registration, each bidding registration application form (the original) must have the signature of one grade-A official (director or general director) or the signatures of two grade-B officials (sectional-level officials), which have already been registered in the bidding membership applications, and must be put into envelopes with seals.

Article 11.- Modes of sending in bidding registration application forms

Registration application forms may be sent to the STC by the following modes:

- Sent via networks (for members having their networks hooked up with the STC);

- Sent directly to the registration ticket boxes at the STC and kept confidential according to the current regulations.

Article 12.- Processing of bidding registering application forms

The bid-opening time is prescribed to be 13:30 hrs on the bidding date. The bid opening may be effected via computer networks. The STC shall guide in detail the process and procedures for bidding via computer networks.

At the time point prescribed for bid opening, the bidding registration application boxes shall be opened at the bidding place of the STC. All registration tickets shall be forwarded to the processing section. The registration tickets shall go through two scrutinies and signed in certification after each scrutiny. Those registration tickets made not according to the set form and/or inscribed not according to the provisions of this Regulation shall be considered invalid and promptly notified by the STC to the bidding registering subjects by fax or via computer networks, with reason(s) for invalidity clearly stated.

After being processed, all valid registration tickets shall be brought together at the bid-evaluating section for input of data into computers.

Article 13.- The determination of bid-winning GB volume and interest rate shall be based on:

- The tendering volumes and interest rates of the members;

- The GB volume projected to be mobilized and the directed interest rate (if any);

- The GB volume opened to the competitive bidding, which is determined equal to the volume of GB expected for bidding minus the volume of GB registered for the non-competitive bidding (at most equal to 30% of the total volume projected for bidding);

- Bid-winning GB volume calculated according to the order of interest rates from lower to higher ones within the range of directed interest rate.

At the highest tendering interest rate within the range of directed interest rate, if the tendering GB volume exceeds the GB volume opened to bidding, the GB volume shall be divided to each tendering ticket in proportion to the total tendering GB volume of each ticket at such interest rate, which shall be rounded up to VND 100 million.

The GB issuing interest rate is the highest bid-winning interest rate commonly applicable to all competitive and non-competitive bid winners.

In cases where the volume of GBs registered for non-competitive bidding exceeds the maximum percentage prescribed by the Finance Ministry, the maximum volume allowed to be bought shall be divided to each tendering ticket in proportion to the registered GB volume of each ticket and rounded up to VND 100 million.

Article 14.- The bond selling prices are prescribed at Point 6.6, Section II of the Finance Ministry�s Circular No.55/2000/TT-BTC of June 9, 2000 guiding the bidding for the Government bonds through the central securities trading market.

Article 15.- Notification of bidding results

After concluding the bid opening and determination of the bid-winning volume and interest rate, the STC shall send the sum-up report on bidding results to the Finance Ministry, concurrently to the State Securities Commission.

Basing itself on such sum-up bidding result report, the STC shall send bidding result notices to the bidding participating subjects and the designated bank, publicize the bidding results on the mass media and post them up at its head office. The modes of sending notices and publicizing bidding results on the mass media are defined in Article 8 of this Regulation.

Article 16.- The bond issuance date is set on the second working day following the bidding date.

Article 17.- Payment of bond buying and transferring money amounts

17.1. Right after receiving the bidding results and at the STC�s request, the designated bank shall have to refund the whole collateral amount to the bid-failing subjects.

17.2. Within 2 working days following the bidding date, the bid-winning subjects shall have to pay the whole GB buying money amount (at the selling price determined in the bidding result notices minus the collateral amount) to the State Treasury�s account at the State Bank�s Transaction Bureau. The money amounts to be paid by the bid-winning members shall have their figures rounded up to the numerals denoting hundreds VN dong.

17.3. After obtaining certification from the Central State Bank (the Transaction Bureau) of the payments by the bid-winning subjects

- The STC shall have to make Credit entries of the paid bid-winning proportions into the securities custody accounts for the bid-winning subjects being custody members, or make Credit entries into the custody accounts of the custody members that undertake to conduct entrusted custody for the bid-winning subjects, and at the same time send certification notices to the custody members on such accounting process. The custody members shall have to make Credit entries to the custody accounts of the entrusting clients;

- In cases where the bid-winning subjects wish to withdraw GB certificates, they shall have to comply with procedures and regulations of the STC.

Article 18.- Fines for delayed payment

In cases where a subject delays paying for the bought GBs, it shall be handled according to the provisions in Item 7.3, Point 7, Section II of the Finance Ministry�s Circular No.55/2000/TT-BTC of June 9, 2000 guiding the bidding for Government bonds through the central securities trading market.

Article 19.- Settlement of GB principals and interests

19.1. For GBs kept in custody at the STC, the settlement of their principals and interests shall be effected through the custody members. At least 10 days before the principal and interest settlement date, the STC shall notify the Finance Ministry of the bond volume kept in custody at the STC, which shall serve as basis for the settlement. One day before the principal and interest settlement date, the Finance Ministry shall transfer money into the STC�s account opened at the designated bank for subsequent transfer to the custody members. Basing itself on the volume of custodian securities, the STC shall transfer money to each custody member for direct payment to the bond owners.

19.2. For kinds of GBs not kept in custody at the STC, the settlement of their principals and interests shall be effected through the State Treasury or agency organizations authorized by the Finance Ministry under the latter�s guidance.

Article 20.- Complaints about violations

The bidding participating subjects may complain about matters related to the organization of bond bidding. Within 10 days after receiving the complaints, the STC shall have to reply in writing. If complainants are not satisfactory, they may lodge their complaints to the concerned competent authorities.

Chairman of the State Securities Commission
NGUYEN DUC QUANG